Blockbuster takes on Netflix with price bust

Movie-rental company Blockbuster Inc. is going head to head with online video rental company Netflix by offering a new online rental subscription service.

Now new and existing subscribers have the choice of Blockbuster-By-Mail, an online subscription service that starts at $4.99 a month. The company's most popular three-out unlimited movie plan will cost $16.99 a month, $1 a month cheaper than Netflix's similar plan. The new Blockbuster service comes cheaper than its Total Access plans that begin at $5.99 a month and let members order movies online and exchange them in stores.

"We are looking to appeal to as many segments of the market as possible," said Randy Hargrove, a spokesman for Blockbuster. "We want to offer the value-conscious customer a service as well as those that don't live near stores."

Blockbuster-By-Mail subscribers will receive a coupon good for one free in-store movie or game rental per month.

Netflix ships 1.6 million DVDs daily to its 6.8 million members and recently shipped its billionth movie. The Blockbuster price reduction comes as Netflix itself is making progress to compete with the online video trend. Over the past six months, Netflix has rolled out a service that lets users download films directly onto a computer.

Netflix also recently debuted a $4.99 DVD and download service that gives customers two DVDs a month and six hours of downloads. The company is working on a streaming feature that will allow users to watch and use time by the minute. Customers can browse titles and not be charged for an entire two-hour movie.

Blockbuster claims it has more than 70,000 titles online, while Netflix claims it has more than 80,000 DVD titles and more than 2,000 downloads.